Skills and regional dynamics

This paper examines the conditional convergence of cognitive, social, and motor skills among manufacturing occupations in Brazil from 2003 to 2019. Using a spatial panel econometric approach, we analyze whether less industrialized regions are catching up in terms of workforce sophistication and how spatial spillovers influence this process. The study introduces a skill-based framework that moves beyond traditional education-based human capital measures, incorporating an index that captures occupational skill complexity. Our results indicate evidence of conditional skill convergence, with social skills exhibiting the fastest convergence rate, followed by cognitive and motor skills. Spatial spillover effects are significant, reinforcing the role of geographic proximity in skill development dynamics. These findings contribute to understanding how industrial labor markets evolve in developing economies and provide relevant information for regional policy design aimed at reducing skill disparities. • Social skills converge fastest, followed by cognitive and motor skills. • Spatial spillovers significantly influence regional skill dynamics. • Less industrialized regions show workforce skill upgrading. • A skill-based approach refines traditional human capital measures.